ITAR (International Traffic in Arms Regulations) and the EAR (Export Administration Regulations) are export control regulations run by different departments of the US Government. Both of them are designed to help ensure that defense related technology does not get into the wrong hands. An export license is a general term for both ITAR and EAR controlled items in which the US Government has granted permission to transport or sell potentially dangerous items to foreign countries or parties.
ITAR: The more stringent of the two sets of regulations was written for articles with direct defense-related applications. Articles specifically designed or otherwise intended for military end-use are enumerated on the United States Munitions List (USML) or the Missile Technology Control Regime (MTCR) Annex and therefore controlled by International Traffic in Arms Regulations (ITAR) which is administered by the Directorate of Defense Trade Controls (DDTC) at the State Department. Items, services, and information are all covered by the ITAR regulations. The most controlled items are Significant Military Equipment (SME) which have “capacity for substantial military utility or capability” such as tanks, high explosives, naval vessels, attack helicopters, etc which are noted on the USML with an asterisk. Some examples include; an export license (DSP-5), exchanging technical emails or teaching how to repair an ITAR-covered item which requires a Technical Assistance Agreement (TAA), and allowing a foreign company to manufacture an item requires a Manufacturing License Agreement (MLA).
EAR: Most other items not specifically listed in the USML, but with the capability to be used for either civilian or military purposes are considered “dual use” and controlled under the Export Administration Regulations (EAR) which is administered by the Bureau of Industry and Security (BIS) at the Department of Commerce (DoC). The Commerce Control List (CCL) is the equivalent list at the DoC to the State Department’s USML. The CCL specifically controls for Chemical & Biological Weapons, Nuclear Nonproliferation, National Security, Missile Technology, Regional Stability, Firearm Convention, Crime Control, and Anti-Terrorism. The level of control depends on the country being exported to, destination party, end-use, and Export Control Classification Number (ECCN). Specifically there are “600 Series” and “500 Series” items that are more strictly controlled than the rest of the CCL, but less strictly controlled than the articles on the USML.
Commodity Jurisdiction
The first step is to determine if the item your company manufactures or exports is on the USML or CCL. If your company chooses to pursue this determination without an export control expert, you can file a form DS-4076 with the DDTC. The DDTC has final rule on all Commodity Jurisdictions, so that the BIS cannot challenge any Commodity Jurisdiction rulings. The difficulty for companies working without an export control expert is that the DDTC can rule very cautiously. This determination may force an item that should not be controlled under ITAR to be more strictly (and hence expensively) regulated.
DDTC Registration
If an item manufactured or exported by a company is ITAR controlled then the company needs to register with the Directorate of Defense Trade Controls (DDTC). DDTC registration, sometimes called ITAR registration, is mandatory and done with a DS-2032 form. It requires a fee of $2,250, $2,750, or more (depending on circumstances) directly payable to the State Department. In succeeding years, the registration fee is determined by the volume of export licenses submitted to the DDTC. Additionally, ITAR Part 129 requires the registration and licensing of brokers.
ITAR Compliance
Before a company can begin to export it is wise to implement an Export Management System (EMS) of some type. An ITAR consultant or ITAR lawyer can help set up an EMS that is appropriate for the size of your company. The EMS should be scaled to the amount of foreign revenue your company is winning and the potential “red flags” of your customers. It is very important to Know Your Customer (KYC), as you are responsible if your shipment somehow ends up in North Korea (for example). At the very least, you will need to classify and track all ITAR or EAR controlled articles and date. Included in this is ITAR training for all relevant employees of your company.
ITAR Certification
Many ITAR consultants and ITAR attorneys offer ITAR certification. However, DDTC and State Department do not recognize any ITAR certification. The words “ITAR certified” bear no practical benefit to you or your company. Buyer beware!
Export License
Export Licenses for ITAR controlled items are processed through a form DSP-5 for permanent or temporary export. This includes screening clients that are in or associated with Sanctioned or Embargoed countries. Additionally, there are certain “End-Use Controls” which prohibit exports to certain countries. The State Department maintains an AECA Debarred List, the Commerce Department maintains a Denied Persons List, Unverified List, and Entity List, and the Treasury Department maintains a Specially Designated Nationals List. If the party you wish to export to is on one of these lists, it is likely that your export license will be denied. For convenience, the US Government does combine these lists into a Consolidated Screening List, however this list does not always contain the most up-to-date information and the exporter of record(you) are still responsible even if the Consolidated List was not updated.
Conclusion to What is ITAR?
This is only an overview of the beginning of the process. It is not meant to be a step-by-step guide. As an exporter you still have to worry about actually getting your items to the destination, complications with country-specific customs regulations, and tariffs. However great opportunities and profits lie beyond the US borders!